State-run steel producer Steel Authority of India (SAIL) and mining major NMDC will invest Rs 260 crore in developing the Arki limestone reserves in Himachal Pradesh.
The two PSUs today entered into a joint venture agreement aimed at starting production from the 100-million tonnes reserves in next three years.
"The companies will together invest Rs 260 crore in development of the mines," Steel Minister Virbhadra Singh told reporters here.
Giving details, NMDC Chairman Rama Som said that the modalities of the JV will be worked out and a "task force for the purpose has been set up".
"In three years time, we will aim to produce 2 million tonnes of limestone per annum from the reserves," he added.
Arki reserves are rich in steel-grade limestone used in steel making. SAIL, being the JV partner, will have the right over the limestone lumps produced from the mines, which will minimise its dependence on imports of the mineral.
"At present, we require 1.6 million tonnes of limestone. We meet the requirement domestically as well as through imports. With our ongoing capacity expansion, the limestone requirement is pegged to go to 3 million tonnes in next few years," SAIL Chairman S K Roongta said.
However, he maintained that SAIL would keep the "option open" to import limestone which will heavily depend on the "freight rates".
SAIL is undertaking Rs 70,000 crore expansion project to take its annual steel production capacity to about 23 million tonnes from about 14 million tonnes at present and would be a ready consumer of limestone lumps.
The limestone fines from the mines are likely to be sold to cement manufacturers like Ambuja Cement and Jaypee Cement.
"The iron ore fines could be sold to adjoining and adjacent cement manufactures like Ambuja Cement and Jaypee Cement," Singh said.
Asked if an end-user industry or a cement company could be set up in the near-by area, the minister said, "There is no such proposal."
Besides limestone, the Arki reserves contain about eight million tonnes of dolomite, consumed be various industries like glass and fertiliser.
The minister said the proposals of disinvestment of SAIL and NMDC will reach the Cabinet by December and the process is likely to be completed within this financial year.
The Steel Ministry has cleared a 20 per cent follow-on public offer for SAIL. The FPO includes 10 per cent stake-sale of government equity and 10 per cent issue of additional shares by the steel maker, in two tranches of 5 per cent each.
Also, the ministry has cleared a proposal to sell 8.38 per cent of its stake in NMDC. The government is expected to raise Rs 29,000 crore with the proposed disinvestment in the two entities.
